China stocks back on the menu as Xi Jinping signals major stimulus in Politburo meeting
Strong policy tone ripples through Chinese assets, with both stocks and bonds rallying while the yuan strengthens
China’s signal of a pivot to all-out stimulus policies has injected a dose of optimism into the nation’s US$10 trillion stock market, where a rebound had showed signs of stalling.
“We’ve seen a decisive change by policymakers of the stance in reversing the course of the economy and supporting the capital market,” said Fang Yi, a strategist at Guotai Junan Securities in Shanghai. “There’s a historical breakthrough in setting tones for economic policies at the Politburo meeting. That’s triggered more imagination for the policies and is expected to repair investors’ confidence in the policy outlook.”
The rhetoric from the Politburo meeting is the strongest in years, at a time when a deflationary trend lingers over the world’s second-largest economy and geopolitical tensions have ratcheted up after the re-election of Donald Trump. While pledging “unconventional” countercyclical measures, China also said that monetary policies would shift from “prudent” to “moderately loose” – a wording not used in top-level meetings since the aftermath of the global financial crisis in 2010.
